Cost Push Inflation

The reason we are looking at this today is because of how the Trump Bump is causing input prices to jump higher already, evidenced in the most recent (December) US ISM numbers, showing the biggest jump since 2011. And this trend will most likely continue with the excitement Trump has created with ‘making America great again’, where even foreign governments are joining the party, which will continue to strengthen employment conditions (already apparent), raising the specter of rapidly rising cost-push inflation. So its understandable precious metals are stirring again, where it appears like inflation, pressure is building for increasing prices.
That said, and in spite of the jobs Trump is destined to create (see here) from his admirable efforts, unfortunately the drag of an over-indebted economy is expected to produce stagflation at best, or if The Donald (and Fed) wants to pull all the stops, some degree of hyperinflation at worse. Therein, if Trump sees his efforts failing as time goes by, again, with the economy continuing to stagnate besides his efforts, America, and the rest of the world, could be looking at a great deal more cost-push inflation in the future if he assigns the Fed the job of fixing the problem. After all, The Donald is a delegator; so such thinking is not a stretch.

This post was published at GoldSeek on 20 February 2017.